Economics
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Item Essays on Economics of Education(2024) Morales Lema, Catalina; Urzúa, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I use data from Chile to study the determinants of schooling trajectories. Chapters 1 and 2 focus on higher education, Chapter 3 on secondary education, and Chapter 4 on teachers. Chapter 1 explores the role of a socio-emotional ability, self-efficacy, in understanding why students with comparable qualifications transit different college paths. This study is the first of two papers dedicated to studying the role of self-efficacy in the path students follow after high school. This first paper discusses the psychology literature on self-efficacy and how it can be measured. Then, through exploratory factor analysis and rich administrative data from Chile, I show that self-efficacy is a construct different from pure cognitive ability. Finally, I estimate a discrete choice model for the decisions of taking the college admissions test, applying, enrolling, and graduating from college. I find that conditional on cognitive ability, a higher self-efficacy increases the probability of taking the college admissions test, applying, and graduating from college within eight years. Analyzing heterogeneous effects, I find a bigger effect among students from low-SES families, which are precisely the ones with lower base levels of these outcomes. In Chapter 2, I take a step further and explicitly model the role of self-efficacy on the trajectories students follow after high school using a structural approach. I estimate a multi-stage discrete choice model with unobserved heterogeneity to study the role of self-efficacy on college applications, enrollment, and graduation decisions. The results indicate that higher self-efficacy significantly increases the likelihood of taking the college admissions exam and submitting a college application, conditional on cognitive ability. For students who apply, increasing self-efficacy also increases their probability of enrolling in and graduating from college, even more than a comparable increase in cognitive ability. From the analysis of socioeconomic groups, I document that improving students' self-efficacy could reduce the socioeconomic gaps in the percentage of students who take the college admissions test, apply, and enroll in college. These findings suggest that policies oriented to boost students' self-efficacy could alleviate income-related inequalities in access to higher education. Chapter 3 is co-authored with Dr. Daniel Kraynak and Dr. Cristina Riquelme. It investigates how local economic conditions impact human capital accumulation in Chile's copper-producing zones using high-frequency data on copper prices, school attendance, and academic performance. To measure the exposure to copper price volatility, we created an index by determining the proportion of workers in the area associated with the metal mining industry. We performed a difference-in-differences analysis by comparing students in areas with low and high copper exposure during periods of varying prices. The results indicate that increasing copper prices in more exposed areas decreases the quarterly attendance of high school students in the same period. We also find that students compensate for this lower attendance by increasing their attendance in the next quarter. Analyzing test score performance, we find evidence of a positive effect of local economic conditions on students' math performance in the same period. However, this effect is completely offset in the following year. Chapter 4 is co-authored with Dr. Macarena Kutscher, Dr. Cristina Riquelme, and Dr. Sergio Urzúa. It explores the contribution of teachers to student performance in Chile's college admission test (PSU). Our analysis is based on a unique teacher-student matched dataset and decomposition methods. The findings suggest that teachers' performance on the PSU and the characteristics of their educational degrees are significant predictors of students' success. When controlling for students' and predetermined school characteristics, the gap between vouchers and public schools is reduced. Productivity differences emerge as key factors driving the disparities across school types. The analysis underscores the crucial role of teacher-student interactions in shaping student outcomes.Item Essays on Higher Education(2024) Montoya Agudelo, Alejandra; Urzúa, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I quantify the impact of uncertainty on schooling postsecondary choices, study the returns to higher education degrees, and analyze the effects of policies that intend to reduce college education costs. In the second and third chapters, I employ structural Roy models and data from the National Longitudinal Survey of Youth 1997 to analyze postsecondary schooling decisions, focusing on four- and two-year college paths. These models have three sources of unobserved heterogeneity affecting earnings and decisions: cognitive, socioemotional, and mechanical latent abilities. The second chapter employs a dynamic Roy model to quantify the impact of uncertainty when making postsecondary schooling. While schooling choices maximize expected value, some individuals opt for alternatives that, in hindsight, do not yield the highest ex-post net value due to idiosyncratic shocks affecting earnings and schooling costs that are unknown when decisions are made. This uncertainty generates significant losses: I estimate that aggregate net value would increase by 11% if individuals had perfect foresight. Moreover, I study how decisions would change under perfect foresight and characterize individuals more likely to be affected by uncertainty. I also explore policy simulations to study the effects of an annual two-year college $16,500 subsidy, including the characterization of compliers—those more likely to attain a two-year college degree because of the subsidy. The third chapter analyzes the interplay of observed and unobserved dimensions as determinants of marginal treatment effect (MTEs) through decomposition analysis. We posit a static Roy model with unordered schooling choices. We focus on MTEs as they shape other treatment effects and capture the impact for those responding to minimal incentives. Additionally, we estimate the model separately for women and men, focusing on describing how responses and treatment effects vary between these two groups. We find different ability distributions and returns to ability for women and men. Moreover, we document how different observed characteristics and ability dimensions play different roles in determining the heterogeneity observed in MTEs across both groups. The last chapter investigates the impact of financial aid programs on high-quality private colleges' decisions, leveraging exogenous variation from a large-scale aid program in Colombia, where beneficiaries could only enroll at high-quality colleges. Using a difference-in-differences strategy and data for all private colleges in the country, we find that tuition increased by about 6.9 percent after the government launched the aid policy. We contribute to the literature by analyzing the effect of financial aid programs on tuition for high-quality universities and studying how universities might change other outcomes beyond tuition in response to the policy. We show universities hire more faculty members, keep the student-to-faculty constant, and open new undergraduate programs. Our findings support a narrative where prestigious colleges prioritize their reputation, opting for gradual expansion without compromising quality.Item Essays on Treatment Effects from Multiple Unordered Choices(2021) Galindo Pardo, Camila Andrea; Urzúa, Sergio S; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)I study some of the methodological and empirical challenges associated with estimating treatment effects of one option versus another, in contexts where agents can choose from many alternatives with no clear rank (i.e., one option is no better than the other, for everyone). In particular, I focus on educational decisions throughout the life-cycle, such as parental choice of childcare, students' choice of high school, and college enrollment. First, I present a strategy to overcome a limitation of instrumental variables in these settings, where there are many endogenous choices. I use this strategy to provide empirical evidence from an early childhood development intervention in Colombia, where parents can choose among different childcare options (e.g., small centers, large centers, or home care). In the third chapter, I focus on the Chilean high school context where students can choose from three types of schools: academic, vocational, or hybrid. I find that, while academic schools seem to improve the student's academic achievement, the effects of hybrid and vocational schools depend on the student's fallback option (i.e., what they would have chosen if their preferred option was not available). Last, in the Colombian context, jointly with Maria Marta Ferreyra and Sergio Urzúa, I examine the labor market returns to short-cycle degrees versus bachelor’s degrees and versus obtaining a high school diploma. Chapter 2 presents a strategy to estimate causal effects in settings where agents can choose from many options along with empirical evidence from an early childhood development intervention in Colombia. I exploit the joint effect of discrete and continuous instruments on the probability of choosing an option. These combined effects of different instruments have been recognized and studied in contexts where there are only two alternatives. In turn, current methods for multiple unordered choices implicitly assume that the potential response to one instrument is the same across the distribution of other instruments. Instead, I allow for the response to the variation in one instrument (for example, an offer of a slot at a childcare center) to differ depending on other instruments (for example, proximity to the center). To do so, I employ a latent utility framework and model agent's responses to the instruments through their effect on each option's costs. With assumptions motivated by economic theory (i.e., convexity of cost functions), I define conditional vectors consisting of combinations of potential choices that differ along the distribution ofa second instrument. I use conditional vectors and recent advances in the instrumental variables literature to estimate local average treatment effects. With this strategy, I empirically assess the effect of different types of childcare (e.g., small centers, large centers, or home care) on the cognitive, nutritional, and socio-emotional development of children from 0-5 years of age in Colombia. My results suggest that childcare centers with better infrastructure and services could improve some children's cognitive development. In contrast, existing estimation methods would find overall negativeeffects of these centers on cognitive development. In Chapter 3, I estimate the effects of different high school types on educational achievement, such as high school completion and higher education enrollment. I find evidence that suggests that attending a vocational high school does not have a differential effect on the probability of enrolling in a vocational college. Moreover, while hybrid schools seem to foster student enrollment in bachelor’s programs, this effect largely depends on the student's fallback option. In particular, there is no evidence of improvements in educational achievement among students who would have chosen academic schools instead of hybrid schools. In Chapter 4, with Maria Marta Ferreyra and Sergio Urzúa, we provide evidence of diversion and expansion effects of changes in the local supply of short-cycle degrees, in the context of higher education for Colombia. Our results suggest that most students would divert from bachelor's- and into short-cycle- degrees as the local supply of short-cycle degrees changes. For these students we find significant gains, particularly among women, in terms of participation in the formal labor market and years of experience.